What’s one of the biggest risks in sponsoring a retirement plan?

All associations—even those with less than $10 million in plan assets—can face legal woes. It only takes one participant to sue the plan and its fiduciaries. The primary focus of recent suits has been on investment costs and the process that sponsors use to make decisions about which investments to offer, as well as asking their provider if there is a less expensive option of the same fund the plan can utilize.

How can benchmarking help?

Getting competitive quotes from several retirement plan record keepers is the only way an association can perform the necessary due diligence not only to compare, but also to ensure that the plan’s fees are reasonable. Good retirement plan advisors will complete a comprehensive benchmarking process, and they’ll continue to work with an association to tackle a variety of issues, such as plan design, compliance, and employee education. They’ll also conduct ongoing investment monitoring and oversight of fees. This saves countless hours of human capital, as well as provides process and documentation that is the recipe for successful outcomes for both participants and plan sponsors.

Can I benchmark on my own?

Asking your finance or human resources team to benchmark a plan by asking a few providers for a quote might sound like an easy assignment, but in reality, it’s a difficult exercise. Each provider’s illustration of fees, investments, and services will be different. I call this the “Baskin Robbins” effect, in which there are at least 31 different ways to describe fees that will confuse even the most astute sponsors. Instead, ask a local advisor who is equipped to do this efficiently and effectively.